FinTech under President Trump: A Brave New World

While much of the world is still trying to adjust its expectations for the next four years, many in the financial services industry are excited for a potential shift in post-crisis regulatory policy. There have been no plans regarding financial services, generally, or FinTech, specifically, announced since the election, but FinTech companies have reason to be cautiously optimistic. President-elect Trump made fewer regulations a cornerstone of his campaign and has indicated his intention to make regulatory rollbacks a reality with his recent cabinet nominations.

While the general principle is that the financial system hates uncertainty, that has been particularly true of the FinTech sector. In the U.S., the supervision and regulation of the FinTech industry has been largely undefined and open to interpretation; this has left many FinTech start-ups unable to move forward due to the potential compliance and enforcement costs/risks. While the OCC, CFPB, and SEC have all recently released statements and/or plans regarding FinTech regulation, the industry is still a highly discussed regulatory orphan. Trump’s official policy of less regulation and the likely dismantling of much of the Dodd-Frank Act, including the CFPB (at least in its current form), may encourage companies to bring their FinTech to the market without as much fear of expensive enforcement actions. Further, Rep. McHenry’s proposed Financial Services Innovation Act is likely to gain traction in Congress and would go a long way toward clarifying the regulatory landscape for FinTech.

Considering the uncertain political landscape and the extensive reshuffling in Washington, it is not prudent to speculate on exactly how FinTech will be treated under the new administration. However, the generally anti-regulation / pro-growth tenor of Mr. Trump and the Republicans in charge of financial policy may give the FinTech industry confidence that a clearer picture of their compliance obligations and place in the financial system will soon emerge.